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South Korea has accepted an offer to hold talks on joint commercial projects from the North, pointing to a restoration of communication channels between the two countries. Pyongyang said Seoul could set the date.

In particular the discussions are to focus on the re-opening of operations at the joint Kaesong industrial zone which lies just inside North Korea.

Kaesong is a key source of revenue for the North – it is where around 100 South Korean manufacturers employ over 50,000 North Korean workers. Operations were suspended there in April when the North pulled its personnel out amid heightened tensions on the peninsula.

Angered by sanctions imposed after its third nuclear test last February, the North and its newly installed leader, Kim Jong-un cut off communication channels and threatened to attack the South and US military bases in the Pacific.

The war mongering rhetoric drove tensions in the region to their highest in decades. In recent weeks however, the situation has calmed down following talks between the North and its chief ally, China.